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IHS

"The size of the market contraction in Russia is the biggest wild card facing vehicle manufacturers across the European continent, if not the world, in 2015 and 2016"

SOUTHFIELD, Mich.--(BUSINESS WIRE)--With 2015 off to a good start, IHS Automotive, part of IHS Inc. (NYSE:
IHS), forecasts global automotive sales for 2015 to reach 88.6 million,
an increase of 2.4 percent over 2014, continuing an unbroken five-year
run of sales recovery and growth from the low point set in the depth of
the Great Recession in 2009. However, a slowdown is being signaled with
just two of the high-potential BRIC markets likely to see increased
sales this year.

China will lead the sector’s volume growth, though IHS expects the
market to slow from 2014. The North American market will continue its
upswing, though the pace differs by country. The size of the contraction
of the Russian car market remains a significant wild card that will
impact the European market throughout the year, according to the
analysis, while other countries in the region continue to recover at a
rate of 2.5 to 3 percent, helped by the European Central Bank’s (ECB)
commitment to full-blown Quantitative Easing (QE).

APAC Growth Continues to Lead Industry; A Slowing China Does Most of
the Lifting

For the APAC region in 2015, China’s economic growth will decelerate
further, to 6.5 percent from 7.4 percent in 2014, as a result of
industrial overcapacity and weakness in the real estate sector. However,
IHS Automotive analysts still expect light vehicle sales in China to
grow by 7 percent in 2015 to 25.2 million units, aided with increased
auto finance penetration, fast dealership expansion and government
vehicle scrappage programs.

According to the analysis, the current anti-trust campaign environment
could alter the relationships among consumers, dealer and OEMs. The
campaign is expected to have a long-lasting effect on premium
parts/vehicle prices in China. Coupled with this, the momentum could
lead to downward adjustment in premium pricing, which helps provide
solid foundation for premium vehicle penetration to further increase in
China in the next decade. We expect premium vehicles in China to top two
million units in 2015 with year-over-year growth of 15 percent.

In India, falling inflation, lower interest rates, energy prices and a
regained confidence will help lift the car market into growth mode
starting in 2015 after a two-year lull.

U.S. Growth Stimulates Global Demand Levels

North America continues to be an impetus to global light vehicle demand
levels. Improving credit conditions throughout the region and sustained,
but tenuous, economic growth among the countries in the region have
helped to motivate total auto sales levels.

“Although the economic conditions and pace of recovery differ slightly
among the North American countries, consumer confidence, credit
availability and pent-up demand have played key roles in sustaining auto
demand momentum since the Great Recession,” said Chris Hopson, manager,
North American light vehicle sales forecasting, IHS Automotive. “This
should help motivate sales once again in 2015.”

IHS Automotive projects regional light vehicle sales volume in North
America to hit more than 20 million units in 2015, up 2.5 percent from
last year.

In the United States, IHS Automotive analysts continue to believe the
upside risks for auto demand are more apparent than the downside risks.
With a strong exit to 2014, and gasoline prices currently plunging,
consumers may feel even more positive throughout 2015. The IHS
Automotive U.S. light vehicle sales forecast for 2015 is 16.9 million
units.

Light vehicle sales in Canada set an annual record in 2014 that is
scheduled to be broken once again in 2015. Light truck sales, especially
CUVs, helped motivate demand levels last year and with lower fuel prices
expected, should once again dominate growth in 2015. The Canadian light
vehicle sales forecast from IHS Automotive for 2015 stands at 1.88
million units.

In Mexico, auto sales stalled through the first seven months of 2014,
causing some concern that new tax policies implemented at the beginning
of 2014 were hurting auto demand growth; however, motivated by
incentives to help spark demand, light vehicle sales grew throughout the
second half of the year. This momentum should continue in 2015, and IHS
projects sales volume to grow 3 percent to 1.17 million units.

There was a stark change in 2014 South America automotive demand
compared to 2013, when monthly sales broke the 500,000 unit mark seven
times. The year preliminarily closed with 5.34 million units – a 10
percent drop from 2013; with politics impairing Argentina and Venezuela,
and the economic climate weighing down markets like Brazil, Chile and
Peru, where it may take a few years for demand to recover to previous
highs.

Uncertainty lingers over Argentina, Brazil, Chile and Venezuela for
2015. Argentina is displaying hints of the “tango crisis” of 1998:
uncontrolled inflation, lack of foreign currency and risk of
devaluation. As a result, IHS Automotive is expecting 2015 sales in
Argentina of roughly 500,000 units. In Brazil, banks have been
tightening credit for the last three years, and they are not showing
interest in boosting credit to the automotive sector. This, along with
the increase in the IPI (an industry tax) in early January, higher
financing rates and weak job generation should translate into sales in
Brazil of 3.25 million units.

In Chile, doubt over car sales is drawn from the emissions tax and the
risk of further currency devaluations will ring in the market close to
the 300,000 unit mark. Finally, it is difficult to imagine the
Venezuelan market tumbling any lower than it already has; however, as
oil prices plummet, the government’s access to foreign currency will
continue to be limited, thus impairing vehicle production.

European Market Continues to be Influenced by Russia

In Europe, the crisis in Russia could offset the boon of lower fuel
prices for Europe’s car buyers and even the new QE boost from the ECB.
As the Russian economy slumps into a deep recession in 2015, its
negative impact on the Eurozone and surrounding countries could be large
enough to offset the consumer benefit from falling fuel prices. Overall,
the IHS forecast for light vehicle sales in Western Europe has only been
fractionally upgraded for 2015 despite the benefits of $60 oil.

After a better-than-expected 5 percent increase in 2014, light vehicle
sales in the mature West European region are forecast to improve by
another 3 percent in 2015, with upside coming if the apparent open-ended
commitment to QE by the ECB pushes the Euro down still further.

“The size of the market contraction in Russia is the biggest wild card
facing vehicle manufacturers across the European continent, if not the
world, in 2015 and 2016,” said Nigel Griffiths, chief automotive
economist, IHS Automotive.

After the recent enormous volatility of the Russian currency, prices of
imported cars look like they will increase well over 20 percent or so
and even domestically-produced vehicles will have to see double-digit
price hikes. This, along with a deep recession compounded by the recent
credit rating downgrades, could push the market down to just 1.8 million
units; a 27 percent decline over 2014 and nearly 40 percent (1.2
million) below the market level recorded in 2012.

Global Sales Growth Continues amid Volatile Price Signals

From a global perspective, the auto industry is now being faced with and
will have to adjust to very large and widespread exchange rate
movements, commodity and raw material price changes and, of course, the
new low oil prices. The last two will be significant tailwinds for the
auto sector, its margins and for most of the world consumers, but at the
same time, their unpredictability will mean long-term business plans
will likely change at a more cautious pace.

IHS Automotive, part of IHS Inc. (NYSE: IHS), offers clients the most
comprehensive content and deepest expertise and insight on the
automotive industry available anywhere in the world today. With last
year’s addition of Polk, IHS Automotive now provides expertise and
predictive insight across the entire automotive value chain from product
inception—across design and production—to the sales and marketing
efforts used to maximize potential in the marketplace. No other source
provides a more complete picture of the global automotive industry. IHS
is the leading source of information, insight and analytics in critical
areas that shape today’s business landscape. IHS has been in business
since 1959 and became a publicly traded company on the New York Stock
Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is
committed to sustainable, profitable growth and employs about 8,800
people in 32 countries around the world.